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I thought I would share how I allocate my investments for retirement. I find that this asset mix has a good risk/return ratio that I am comfortable with for the long term. Bear in mind that I am willing to take more risk than the average investor.

I have 5 main categories to choose from:

Domestic (USA) stocks

International Stocks (outside USA)

Bonds (USA Domestic)

Bonds (International)

Alternative Asset (Such as real estate, gold, etc.)

Here are my percentage allocations that I try to maintain:

Domestic (USA) stocks - 30%

International Stocks (outside USA) - 60%

Bonds (USA Domestic) - 5%

Bonds (International) - 5%

Alternative Asset (Such as real estate, gold, etc.) - 0%

I am heavy into international stocks as I live and work in the USA so I already have a lot of my financial life "invested" domestically. Most people already have Real Estate alternative asset by owning a home. One asset I did not mention here is cash as I believe that no retirement money should be in cash unless you are retired. I would include CD's as part of the bonds category.

For the lazy people out that I recommend using the fund of funds out there that have a target retirement date such as 2040, for example. They do a reasonably good job in asset allocation and are lower risk that I prefer. They are also low cost in fees as well as they are very easy to administrate.

One general rule I read about is that for more risk adverse investors: Your percentage asset allocation in bonds should roughly equal your age (until about age 70). I am currently more aggressive than this since I am not 10 years old. You can also simplify this rule about by staying 20% until age 30, 30% until age 40, and so on. This keeps you a little more aggressive in stocks but also reduces your weight in them over time. The choice is yours.

Overall asset allocation is key to staying on track for retirement. Review and adjustments are best done once a quarter. I do mine every Feb, May, Aug, and Nov. I chose these months as they are not at the end of the normal business quarter where things can change drastically over night and possibly throw you off more. Be smart about your investing and compound interest will take care of the rest!